Porter's five forces example: the earplug market

What Porter's five forces is

Porter's five forces is a model for judging how attractive an industry is. It looks at five pressures on profit: rivalry between existing competitors, the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers and the threat of substitutes. The stronger the forces, the less profit is left for anyone in the industry.

Michael Porter set it out in Harvard Business Review in 1979 and revisited it in 2008. It is a tool for an industry, not for one competitor. That matters for everything below.

The five forces, one by one

1. Rivalry among existing competitors

How hard the companies already in the market fight, and with what. Price cuts, promotions, ad spend and launches all count. Rivalry on price hurts profit most, because buyers learn to expect the lower price.

2. Threat of new entrants

How easily a newcomer could get in. The question is what stands in the way: brand, reviews, scale, distribution, search rankings, a return policy a small brand cannot afford.

3. Bargaining power of suppliers

How much the people you buy from can squeeze you. Few suppliers, unique inputs or high switching costs make them strong.

4. Bargaining power of buyers

How much your customers can squeeze you. Buyers are strong when switching is free, when products look alike and when price information is everywhere.

5. Threat of substitutes

Products from outside the industry that do the same job. Not a rival brand of the same thing, but a different way to get the result.

What outside data can and cannot read

Rivalry and the threat of new entrants are visible from outside. Rivals fight in public: prices on their store, ads in the Meta ad library, rankings in search and in AI answers, creators on social. The barriers a newcomer faces are public too, because they are the same assets: the reviews, the pages, the followers.

Suppliers, buyers and substitutes are mostly private. Nobody publishes their supplier contracts or their margin. Buyer power shows up only in traces, such as reviews and return policies. Substitutes live in other categories that a competitor report does not cover. For those three, the honest method is reasoning, labelled as reasoning.

Worked example: the earplug category

Loop Earplugs is a direct-to-consumer earplug brand and the one we have public data on. One brand is not an industry, so read the measured rows as what one well known brand in the category is doing, not as the whole market.

Rivalry: measured

Between 15 and 27 September 2026, 38 of Loop's products changed price. 18 of the 38 moved by exactly minus $1.00, which reads as one decision applied to 18 products rather than 18 decisions. The biggest single move was the Travel Bundle, from $183.95 to $179.95. That is a brand nudging prices, not a price war.

The ads say the same. The Meta ad library showed 6,989 live Loop ads when we last collected it on 6 September 2026, and only 6% carried a discount. The median ad had run for 93 days. Rivalry in this category is fought with volume and presence, not with offers. The price architecture note explains why a wide price ladder lets a brand avoid discounting.

Threat of new entrants: measured

The barriers are what a newcomer would have to build. Measured on 28 September 2026, Loop appears in 79% of AI answers to 18 buyer questions across five AI engines, and is named first in 69%. It has 8,133 Trustpilot reviews, 9,996 indexed URLs, 841,971 Instagram followers and 169 creators around the brand.

None of that stops a new brand from making an earplug. It stops it from being found. The share of AI answers note covers how that ranking is measured.

Suppliers: partly read, mostly reasoning

We cannot see Loop's manufacturers or material costs. Reasoning: earplugs are made from common materials such as silicone and foam, so manufacturing suppliers are unlikely to hold much power over a brand of this size. This is an assumption, not a finding.

One supplier is visible. In August 2026, 49.4% of Loop's modelled visits came from search and 9.0% from display ads. The platforms that supply buyers, search engines and ad networks, have real power over any brand that depends on them. For a DTC brand, that is often the strongest supplier force.

Buyers: partly read, mostly reasoning

No single consumer has leverage, but as a group they are strong: switching costs nothing, and every rival is one search away. A 100-day return window is a sign of a brand lowering the buyer's risk to win the sale.

The Trustpilot rating of 3.6, with newer reviews at 2.58 (measured 28 September 2026), suggests buyers are not shy about saying when a product fails them. What we cannot read is price sensitivity or repeat purchase rate.

Substitutes: reasoning only

The job is blocking or softening sound. Other ways to do it: cheap foam plugs from a pharmacy, noise cancelling earbuds, custom moulded plugs, white noise for sleepers. We measured none of them. A reasoned guess: cheap foam is a strong substitute at the low end, and earbuds compete for the same money at the high end.

Three short examples from other industries

These are hypothetical companies, invented to show how the forces shift from one industry to the next. No real company is described.

A meal kit subscription (hypothetical). Rivalry is high, because rivals compete with first box discounts. Buyers are strong: cancelling takes a click. The substitute is the supermarket and the takeaway app, both close at hand.

A payroll software company for small firms (hypothetical). Buyer power is lower, because switching payroll mid-year is painful. Suppliers are few but important: the cloud host and the bank rails. The threat of new entrants is held down by compliance work that takes years to build.

An independent gym (hypothetical). Rivalry is local, so only gyms within a short drive count. The threat of new entrants depends on rent and fit-out costs. Substitutes are strong: home workouts, running and fitness apps all do the same job without a membership.

How to use it

1. Define the industry narrowly. "Earplugs sold online" gives a different answer from "hearing protection".
2. Start with rivalry. Collect rivals' prices, ads and launches over a few weeks, not one day.
3. List the barriers a new entrant would face, and check each one against public data: reviews, search presence, AI answers, followers.
4. For suppliers, buyers and substitutes, write down what you believe and why, and mark it as reasoning.
5. Rate each force low, medium or high, and write one sentence on what it means for your profit.
6. Pick one force to act on. A brand that cannot beat a rival on presence can still win a buyer segment it serves badly.

To put the rivalry side next to your own numbers, the strategy canvas and the competitor battlecard are the next steps. Loop's measures sit on its benchmark.

What it cannot tell you

The five forces describe an industry at one moment. They do not tell you what to do, and they do not tell you which competitor will win. Two brands in the same industry face the same five forces and can still end up with very different results.

Three of the five forces rest on private information. From outside, you can measure rivalry and the barriers to entry. Supplier power, buyer power and substitutes need interviews, sales data or market research, and without them your rating is a guess. Label it as one.

The model also leaves out regulation. A wider market view helps there.

The five forces also leave out the world around the industry: regulation, the economy, technology and the rest. That is what a PESTEL analysis covers.

FAQ

What is an example of Porter's five forces?

In the earplug category, rivalry is fought with ad volume and small price moves rather than discounts, one brand's presence in search and AI answers is the main barrier to entry, and search and ad platforms are the strongest suppliers. The table above shows which parts are measured and which are reasoned.

Which of the five forces is the most important?

It depends on the industry. Porter's point is that the strongest force sets the limit on profit. In a DTC category, it is often rivalry or the platforms that supply buyers.

Can you do a five forces analysis on one competitor?

Not really. The model is built for an industry. You can use one competitor's public data to read rivalry and entry barriers, as above, but it will not give you the whole picture.